Patna High Court Quashes Customs Seizure for Lack of “Reason to Believe” (2024)

Patna High Court Quashes Customs Seizure for Lack of “Reason to Believe” (2024)

The Patna High Court has set aside a customs seizure of a truckload of dried areca nuts after finding that the seizing officer failed to record any concrete “reason to believe” as required by Section 110 of the Customs Act, 1962. The Division Bench comprising Hon’ble Mr. Justice P. B. Bajanthri and Hon’ble Mr. Justice Alok Kumar Pandey delivered the CAV judgment on 25 September 2024 in Civil Writ Jurisdiction Case No. 10582 of 2024.

Simplified Explanation of the Judgment

This case arose from the seizure of 24,288 kg of dried areca nuts (352 bags) and the transport vehicle during inter-State movement from Assam to Karnataka. Customs officials intercepted the goods near a check post in Bihar on 2 April 2024 and, on the same day, issued a seizure memo under Section 110 of the Customs Act, citing alleged violations of Sections 7, 11, 46 and 47 of the Customs Act read with Section 3(2) of the Foreign Trade (Development and Regulation) Act, 1992. The petitioner had all relevant business registrations, invoice and e-way bill, and later sought and obtained provisional release against bond and bank guarantee. The writ petition challenged the legality of the seizure itself.

The petitioner’s main argument was straightforward: Section 110 allows seizure only when the officer has a genuine, recordable “reason to believe.” Simply naming statutory provisions is not enough; there must be specific, intelligible reasons backed by material on record. The petitioner also contested reliance on “local traders’” visual inspection to label the nuts as foreign origin, pointing out that such subjective opinions are unreliable without scientific standards.

The respondents defended the seizure by saying the memo referenced the violated provisions and that was sufficient; they emphasized that the goods had already been released provisionally and that the petitioner could face further proceedings. They also cited two High Court decisions to support their stance.

The Court’s analysis drilled into the legal meaning and discipline behind the phrase “reason to believe.” Drawing from legislative history of the Customs Bill, 1962 and comparable statutory frameworks (including PMLA), the Bench underscored that “reasons” must be recorded in writing and must show application of mind based on materials available. This is not a mere ritual—recorded reasons are the cornerstone for judicial review in quasi-judicial actions.

Applying these principles, the Court examined Item 6 of the seizure memo—the space where the officer is expected to record the “reason for seizure.” Instead of any concrete reasoning, it only recited a list of sections allegedly violated. The Bench held that this bare assertion, without factual material or nexus, fails the standard of “reason to believe.” On the facts, the Court also noted that none of the cited provisions (Sections 7, 11, 46, 47 of the Customs Act and Section 3(2) of the FTDR Act) appeared to be attracted to an inter-State movement supported by regular trade and transport documents.

On the “foreign origin” claim, the Court rejected reliance on visual opinion of local traders—especially when the Agriculture Ministry/ICAR stance is that origin cannot be determined by naked eye or standard lab tests without appropriate comparative samples. The record further contained a test note from the Arecanut Research & Development Foundation, Mangaluru, stating that the consignment “resembles areca nuts of India and nuts are good.” This supported the petitioner’s case and undercut the suspicion theory.

The Court also observed that the transportation and GST documents appeared genuine per the respondents’ own counter affidavit, and crucially, the seizure memo did not mention any specific grounds or alleged fraud. A reasoned decision is imperative even in administrative or quasi-judicial orders; standardized, pro-forma or “rubber-stamp” reasons cannot survive judicial scrutiny.

In the result, the High Court: (i) set aside the seizure memo dated 02.04.2024; and (ii) directed discharge of the bank guarantee and bond furnished for provisional release, within three months from receipt of the order. The writ petition was allowed.

Significance or Implication of the Judgment (For general public or government)

This ruling reiterates a fundamental safeguard: enforcement powers under the Customs Act must be exercised with demonstrable “reason to believe,” grounded in material facts and expressed in writing. For traders and transporters engaged in inter-State movement of goods, the decision offers protection against arbitrary seizure merely by invoking statutory sections. It clarifies that officers cannot rely on vague suspicion or non-scientific “eye-ball” assessments by local traders to brand goods as of foreign origin. The case also reinforces best practice in administration—speaking orders that reveal application of mind enable meaningful judicial review and promote fairness in trade regulation. For government authorities, it is a reminder to strengthen documentation and evidentiary standards before coercive measures are taken, particularly where goods are moving under valid tax and transport documents.

Legal Issue(s) Decided and the Court’s Decision with reasoning

  • Whether the seizure complied with Section 110 of the Customs Act, 1962 (requirement to record “reason to believe”): The Court held there was non-compliance. Merely listing alleged statutory violations in the seizure memo without disclosing the factual material or reasoning does not meet the statutory standard. Therefore, the seizure was illegal.
  • Whether “local traders’” visual opinion could establish foreign origin of the areca nuts: No. The Court found such opinions unreliable in the absence of scientific methodology, especially considering ICAR/Agriculture Ministry views that origin cannot be determined by naked eye and the supportive note from the specialized foundation indicating resemblance to Indian areca nuts.
  • Whether the statutory provisions cited (Sections 7, 11, 46, 47 of Customs Act; Section 3(2) FTDR Act) were attracted: On the facts, the Court found no material in the memo to show how these provisions applied to an inter-State consignment backed by proper documents, thus the bare citation failed to justify seizure.
  • Consequential relief: With the seizure set aside, the bank guarantee and bond furnished for provisional release were ordered to be discharged within three months.

Judgments Referred by Parties

  • Angou Golmei v. Smti. Vizovolie Chakhsang & Anr., 1994 (1) PLJR 800 — cited on unreliability of local traders’ opinion.
  • M/s Om Sai Trading Company & Anr. v. Union of India & Ors., LPA No. 1153 of 2019 — cited on interpretation of “reason to believe.”
  • Jaimatajee Enterprises v. Commissioner of Customs (Preventive) & Ors., Writ Tax No. 573 of 2020 — cited regarding Section 110.
  • M/s Maa Kamakhya Traders v. Commissioner of Customs (Preventive) & Ors., Writ Tax No. 1287 of 2023 — cited on “reason to believe.”
  • Commissioner of Customs Dept., Govt. of India, Patna v. Dwarka Prasad Agarwal & Ors., (2009) 2 PLJR 858 — cited on factual aspects supporting petitioner’s case.

Judgments Relied Upon or Cited by Court

  • Legislative history: Report of the Select Committee on the Customs Bill, 1962 — emphasising that reasons should be given in writing before seizure.
  • PMLA, Section 5(1) (analogous requirement of recording reasons) — intent is that reasons for belief are to be recorded in writing.
  • N. Nagendra Rao & Co. (on formation of opinion based on material) — cited on non-arbitrariness of belief.
  • Phoolchand Bajrang Lal v. ITO, [1993] 203 ITR 456 (SC) — sufficiency of reasons not justiciable, but existence and rational nexus is; used to shape the “reason to believe” test.
  • ITO v. Lakhmani Mewal Das, 1976 SCR (3) 956 — there should be a “live link” between material and belief.
  • Aslam Mohammad Merchant v. Competent Authority, (2008) 14 SCC 186 — reasons must be recorded and premised on materials; no roving enquiry.
  • Kranti Associates line of cases as summarized in Oryx Fisheries (P) Ltd. v. Union of India, (2010) 13 SCC 427 — recording of reasons is integral to quasi-judicial fairness.
  • Additional authorities emphasising reasoned orders in administrative/quasi-judicial decisions, including S.N. Mukherjee v. Union of India, (1990) 4 SCC 594; State of Orissa v. Dhaniram Luhar, (2004) 5 SCC 368; East Coast Railway v. Mahadev Appa Rao, (2010) 7 SCC 678; and others as discussed by the Bench.

Case Title
Assam Supari Traders v. Union of India & Ors. (Patna High Court)

Case Number
Civil Writ Jurisdiction Case No. 10582 of 2024.

Coram and Names of Judges
Hon’ble Mr. Justice P. B. Bajanthri; Hon’ble Mr. Justice Alok Kumar Pandey.

Names of Advocates and who they appeared for
For the petitioner: Mr. Prabhat Ranjan, Advocate; Mr. Ansh Prasad, Advocate.
For the respondents: Dr. K. N. Singh, ASG; Mr. Anshuman Singh, Sr. SC (Customs); Mr. Devansh Shankar Singh, Advocate; Mr. Shivditya Dhari Sinha, JC to ASG.

Link to Judgment
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Samridhi Priya

Samriddhi Priya is a third-year B.B.A., LL.B. (Hons.) student at Chanakya National Law University (CNLU), Patna. A passionate and articulate legal writer, she brings academic excellence and active courtroom exposure into her writing. Samriddhi has interned with leading law firms in Patna and assisted in matters involving bail petitions, FIR translations, and legal notices. She has participated and excelled in national-level moot court competitions and actively engages in research workshops and awareness programs on legal and social issues. At Samvida Law Associates, she focuses on breaking down legal judgments and public policies into accessible insights for readers across Bihar and beyond.

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